Corruption at Hedge Funds Even More Rampant Than You Think, Study Shows

Forbes
April 3, 2013


While some of the findings are troubling, Jordan A. Thomas says there is a silver lining to recent hedge fund industry survey

According to Jordan Thomas, chair of the whistleblower practice at Labaton Sucharow, the survey was an attempt to gauge the extent of wrongdoing inside of hedge funds and the likelihood that hedge fund professionals would report illegal activity to the authorities.

Thomas, who worked as the assistant chief litigation counsel in the SEC's enforcement division until July 2011, says there is a silver lining to the new survey. It asked whether respondents would report wrongdoing if they were protected by the provisions of the Dodd-Frank whistleblower law. Eighty-seven percent said they would. Eighty-three percent said they were already aware of the program. But seriously? They say corruption is rampant, and the vast majority would report it—when few actually do.

"The 87% represents hope," says Thomas. "It is likely that the law will lead to more reporting in the industry."